compliancemanual_30june09

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NATIONAL SECURITIES DEPOSITORY LIMITED

Compliance Manual for Depository Participants

9th Edition

July 2009


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PREFACE

The Depositories Act 1996, SEBI (Depositories and Participants) Regulations, 1996,

the Bye Laws of NSDL, Business Rules of NSDL, Circulars issued by NSDL etc.

require the Depository Participants (DPs) to comply with certain procedures

relating to functions in depository system. This manual is a compilation of relevant

sections of The Depositories Act, 1996, SEBI (Depositories and Participants)

Regulations, 1996, Bye Laws, Business Rules and circulars issued by NSDL (upto

30.06.09) arranged topic wise. A further segregation is made at sub-topic level

wherever possible for the convenience of the readers.

A subject wise index based on circulars is given separately to facilitate direct

access to the circulars. Additional space is provided at the end of each topic/

sub-topic for manually updating the details of circulars issued after 30.06.09.

As per Bye Law 6.2.1 (vi), the depository may make it mandatory for a DP to

appoint a Compliance Officer who shall interact with the depository on behalf of

the DP for compliance with the Bye Laws and Business Rules. This manual will be

particularly useful for the compliance officers of the DPs.

We request the readers to send to us feedback on the usefulness of this manual

and enhancement/improvement suggested in future editions of this manual.

J J J

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DISCLAIMER

This Manual provides information solely as a reference guide and is meant to

supplement the efforts of the Compliance Officer in carrying out his/her duties

as a Compliance Officer. While every effort has been made to compile various

relevant statues, this manual is not meant to be a substitute to the provisions of

The Depositories Act 1996, SEBI (Depositories and Participants) Regulations, 1996,

the Bye Laws of NSDL, Business Rules of NSDL and Circulars issued by NSDL. NSDL

does not hold out that this compliance manual is exhaustive. Compliance Officers

are advised to study original source for the sake of completeness on any compliance

related matters.

This Manual includes circulars issued by NSDL up to 30.06.09. Compliance Officers

should refer the circulars issued after that date to update themselves. The titles

given in the manual are meant to draw attention of the reader and does not

purport to summarize the contents of the circulars. Compliance Officers are

advised to study the circulars thereof.

J J J

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INDEX

1. Account Opening

a. General .............................................................................................. 1

b. PAN ............................................................................................... 48

c. Power of Attorney ............................................................................... 75

d. Other ............................................................................................... 76

2. Dematerialisation

a. General ............................................................................................ 81

b. Transfer-cum-demat............................................................................. 86

c. Transposition-cum-demat ...................................................................... 88

d. Transmission-cum-demat ....................................................................... 89

3. Instructions Processing

a. General ............................................................................................ 91

b. Controls on DI Forms ........................................................................... 102

c. Bulk Instructions ................................................................................ 117d. Others............................................................................................. 121

4. Transmission ............................................................................................ 161

5. Provision of transaction statement ................................................................ 169

6. Internal Controls/Reporting to NSDL/SEBI

a. General ........................................................................................... 193

b. Internal / Concurrent Audit ................................................................... 199

c. Grievance Redressal ............................................................................ 213

d. Termination of Participant .................................................................... 216e. SEBI Annual Fees ................................................................................ 216

f. Information to SEBI............................................................................. 216

7. Grievance Redressal .................................................................................. 219

8. DP Service Centres .................................................................................... 225

9. Charges .............................................................................................. 237

10. Anti Money Laundering ............................................................................... 251

11. Connectivity/Reconciliation ......................................................................... 277

12. Record Keeping ........................................................................................ 281

13. Systems

a. General ........................................................................................... 287

b. Backup ............................................................................................ 350

c. Anti-virus ......................................................................................... 358

d. Capacity Planning............................................................................... 362

14. Renewal of registration .............................................................................. 379

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CIRCULARS INDEX

Subject Date(s) Page No.

ACCOUNT OPENING

Clarifications/guidelines issued after

Master circular June 13, 2009 .......................... 1May 29, 2009 ........................... 2May 14, 2009 ........................... 3May 7, 2009 ............................. 3

Master Circular on 'Account Opening' May 2009 ................................ 3Bank Account details October 16 2008 ..................... 36

June 4, 2008 .......................... 37

April 7, 2008 .......................... 37

April 30, 2002 ........................ 38

Bank account details - MICR April 24, 2007 ........................ 39

February 23, 2006 ................... 39Account opening Forms and New Features January 9, 2009 ...................... 41

March 26, 2008 ....................... 41

November 12, 2007.................. 42

November 25, 2005.................. 44

September 15, 2005 ................. 44

HUF accounts with joint holdings August 12, 2002 ...................... 44

Clarification regarding capturing address in theclient master - IPO financing October 1, 2004 ...................... 44

Exemption from obtaining latesttransaction statement June 18, 2007 ........................ 44

SEBI Order February 10, 2009 ................... 46

February 3, 2009 ..................... 47

February 3, 2009 ..................... 47

March 13, 2007 ....................... 47

PAN June 12, 2009 ........................ 48

January 9, 2009 ...................... 48

November 18, 2008.................. 49

Septemer 29, 2008 .................. 49

July 8, 2008 ........................... 49

June 30, 2008 ........................ 50

September 13, 2007 ................. 51

August 14, 2007 ...................... 54

August 2, 2007 ....................... 55

May 10, 2007 ......................... 56

February 2, 2007 ..................... 57

December 29, 2006.................. 59

September 27, 2006 ................. 61

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September 18, 2006 ................. 65

August 9, 2006 ....................... 66

July 24, 2006 ......................... 70

July 18, 2006 ......................... 73

May 22, 2006 ......................... 73March 25, 2006 ....................... 74

Account operation - Power of attorney September 22, 2007 ................. 75

Others May 7, 2009 ........................... 76

November 10, 2008.................. 78

DEMATERIALISATION

Demat request - POA holders January 1,1998 ....................... 82

Demat request - Handling request in bulk January 6,1998 ....................... 82

Demat request - Name matching January 11,1999 ..................... 82

Demat request - Internal control on despatch February 25, 1999 ................... 82

Demat Processing - Certificates submittedfor demat April 12,2004 ......................... 83

Demat processing - SEBI directive to R&T Agent May 28, 1999 ......................... 83

Demat processing - Time standard for rejecteddemat requests October 21,1999 ..................... 83

Demat request - due care November 18, 1999 .................. 84

Demat request - wrong release June 26,2000 ......................... 84

Companies delaying demat request confirmation August 9, 2008 ....................... 84

June 4, 2004 .......................... 85

March 1,2004 ......................... 85

November 6, 2001 ................... 85

Request for rejection of pending demat &account closure February 22, 2003 ................... 85

Transfer-cum-demat - Withdrawal of Scheme February 11, 2004 ................... 87

INSTRUCTIONS PROCESSING

Instructions Time Stamping October 13, 1998 .................... 92

Instructions - Guidelines November 5, 2008 ................... 92

October 21, 2004 .................... 92

March 7, 2003 ........................ 93

March 26, 1999 ....................... 94

Instructions - Guidelines for Participantshaving CM accounts March 10, 2000 ....................... 96

September 17, 1999 ................. 97


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Instructions - Acceptance deadline forRolling Settlements June 26, 2009 ........................ 98

April 8, 2002 .......................... 99

January 7, 2000 ...................... 99

October 29, 1999 .................... 99

Instructions - Procedure for Online InterDepository Transfer of Securities June 30, 2009 ....................... 100

December 19, 2002................. 100

December 12, 2002................. 100

Precaution while processing DIS andDespatch of transaction statement October 28, 2005 ................... 101

Instructions - Serial number validationfor Inter-depository instructions &NCFM certificates March 3, 2003 ....................... 102

Instructions - DI form - Serial number control January 25, 1999 ................... 102Instructions - SEBI's stipulated proceduresfor issuance and verification June 2, 2000 ......................... 102

SEBI circular on safeguards of the investorson transfer of securities February 29, 2008 .................. 103

February 15, 2007 .................. 105

Operating guidelines regarding issuance,re-issuance of Delivery Instruction Slips August 5,2004 ....................... 107

Instructions - Revised DI forms September 12, 2008 ................ 110

March 26, 2008 ...................... 111November 12, 2007................. 112

October 30, 2002 ................... 114

July 13, 2002 ........................ 114

SEBI directive on printing the GrievancesRedressal Mechanism on Delivery InstructionForm Book July 19,2004 ......................... 115

Instructions - Facility for bulk instructionsby Power of Attorney holder January 24, 2008 ................... 117

Instructions - Facility for bulk instructions

by Clearing Members July 21, 1999 ........................ 118

Instructions - Facility for bulk instructionsby clients May 26, 2003 ........................ 119

April 18, 2000 ....................... 119

Instructions - Facility of filling instructionswhere POA is executed in favour of the Participant October 19, 2000 ................... 119

Bulk verify & release facility for interdepository transfer instructions July 23, 2007 ........................ 120

December 8, 2003 .................. 120

Securities Lending & Borrowing Scheme (SLBS) November 5, 2008 .................. 121


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April 16, 2008 ....................... 123

January 29, 2008 ................... 125

Procedure for execution of transactions basedon receipt of electronic instructions January 11, 2008 ................... 140

Delivery of Instructions through SPEED-e June 20, 2009 ....................... 143

June 15, 2009 ....................... 143

May 15, 2009 ........................ 144

April 11, 2009 ....................... 144

April 1, 2009 ......................... 145

March 21, 2009 ...................... 147

March 13, 2009 ...................... 148

December 13, 2008................. 149

November 10, 2008................. 150

September 26, 2008 ................ 150June 26, 2008 ....................... 150

April 23, 2008 ....................... 151

April 11, 2008 ....................... 152

April 04, 2008 ....................... 153

April 03, 2008 ....................... 154

March 3, 2008 ....................... 154

January 3, 2008 ..................... 155

August 27, 2001 ..................... 156

Auto Cancellation of Unconfirmed Pledge/Hypothecation/SLB Orders due toAuto Corporate Actions October 13, 2001 ................... 156

October 12, 2001 ................... 156

Auto Corporate Action for redemption May 14, 2002 ........................ 157

Precautions while executing instructionsfor Buy back or Open offer July 9, 2002 .......................... 158

Precautions while executing fax instructions June 16, 2008 ....................... 158

May 9, 2002 .......................... 158

Stipulated time for transfer of securities fromCM Pool Account & Penalty April 22, 2004 ....................... 159

TRANSMISSION

RBI Clarification on Transmission ofGovernment Securities March 19, 2009 ...................... 165

Capturing of PAN details in the DPMASin case of transmission January 23, 2007 ................... 166

January 18, 2007 ................... 166


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Transmission - Processing pending cases November 3, 2000 .................. 167

Transmission cum Demat - Removal of time limit June 25,2001 ........................ 167

PROVISION OF TRANSACTION STATEMENT

Transaction Statements to clients throughInternet (Web-based or Email) May 21, 2008 ........................ 170

March 7, 2002 ....................... 171

Transaction statement - Provisions through Internet September 22, 1998 ................ 172

Internet-based Demat Account Statement - IDeAS April 11, 2009 ....................... 174

April 1, 2009 ......................... 174

October 5, 2007 ..................... 177

September 29, 2007 ................ 177

October 5, 2006 ..................... 177

June 29, 2004 ....................... 178December 20, 2003................. 178

Exemption from sending physical transactionstatement to subscribers of IDeAS March 24, 2006 ...................... 179

Transaction Statement - Controls on despatch October 20, 1999 ................... 180

Transaction Statement - Provide transactionstatement and not holding statement January 31, 2000 ................... 180

Transaction Statement - RBI directive onproviding Transaction Statement to Bank clients February 22, 2003 .................. 180

Transaction Statements - Footnote in thetransaction statements sent to Clients December 23, 2004 ................. 180

June 21, 2004 ....................... 181

Providing Statement of transaction toBeneficial Owner consequent to account closure May 11, 2006 ........................ 181

Transaction Statements - Exemption from givinghard copies of transaction statementsto Beneficial Owners by DPs August 24,2004 ...................... 181

Transaction Statements - Exemption fromproviding transaction statements April 1, 2009 ......................... 183

January 15, 2009 ................... 183September 9, 2005 ................. 184

August 24, 2004 ..................... 184

SMS Alert Facility May 6, 2009 .......................... 184

April 22, 2009 ....................... 188

June 5, 2008 ......................... 189

April 22, 2008 ....................... 189

September 29, 2007 ................ 189

September 21, 2007 ................ 190

August 10, 2007 ..................... 190


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INTERNAL CONTROLS/REPORTING TO NSDL/SEBI

Written communication to NSDL August 3, 2005 ...................... 193

September 9, 2002 ................. 193

Compliance Officer details December 29, 2005 ................. 194

Submission of Compliance Certificateby Participants July 6, 2006 .......................... 195

Acknowledgment by NSDL for submission ofCompliance reports by Depository Participants October 19, 2006 ................... 196

Format for filing charge structure January 8, 2007 ..................... 196

Audited networth certificate - Financial statement March 19, 2008 ...................... 197

December 11, 2003 ................. 197

Off-market transactions report January 1, 1998 ..................... 199

Internal / Concurrent Audit November 3, 2008 .................. 199March 22, 2007 ...................... 209

June 24, 2006 ....................... 211

April 20,2000 ........................ 213

Internal Audit - Management comments April 4, 2001 ......................... 213

Grievance redressal - Reporting September 16,2004 ................. 213

November 25, 2003................. 215

January 31, 2001 ................... 215

October 6, 1998 ..................... 215

Schedule of payment of SEBI Annual Fees January 3, 2003 ..................... 216

Weekly demat information to SEBI notto be furnished December 20, 2003 ................. 216

GRIEVANCE REDRESSAL

SEBI Circular - Exclusive E-mail Id for redressalof Investor Complaints December 27, 2006 ................. 219

Grievance redressal - reporting September 16, 2004 ................ 221

November 25, 2003................. 223

January 31, 2001 ................... 223

October 6, 1998 ..................... 223

DP SERVICE CENTRES

Adequate internal controls for the branchesof Depository Participants July 9, 2007 .......................... 225


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Branch direct connectivity - More than5000 accounts August 27,1999 ...................... 226

SEBI directive on creating awareness amongdemat account holders for PAN card November 21, 2006................. 227

Qualified personnel - Mandatory June 30, 2000 ....................... 227

June 6, 2000 ......................... 227

August 13,1999 ...................... 228

List of holidays June 5, 2006 ......................... 228

Submission of details of all places fromwhere depository services are offered September 25, 2007 ................ 228

Branch services - Display of type of services August 24, 2000 ..................... 233

Requirement of NCFM/NSDL certified personnelat service centres February 11, 2009 .................. 233

Clarification regarding franchise/service

centre and NCFM qualifier person June 25, 2003 ....................... 233Branch Services - SEBI directiveon Branch connectivity March 6, 2003 ....................... 234

Procedure for Termination of Franchisee February 26, 2002 .................. 234

CHARGES

Format for filing charge structure with NSDL January 8, 2007 ..................... 238

Charges - waiver request to be submittedwithin one month December 29, 2003 ................. 238

June 29, 1999 ....................... 239SEBI Directive on reduction in Charges December 27, 2007 ................. 239

August 12, 2005 ..................... 240

December 29, 2003 ................. 241

Closure of accounts with zero balances March 4, 2002 ....................... 243

SEBI directive on non levy of charges for transferof securities consequent to account closure October 5, 2007 ..................... 243

January 30, 2006 ................... 246

January 5, 2006 ..................... 247

Closure of accounts - SEBI Directive onabolishing account closure charges November 1, 2002 .................. 247

Closure of accounts - Request received

on plain paper December 18, 2002 ................. 248

Monthly Bills March 5, 2004 ....................... 248

ANTI MONEY LAUNDERING June 9, 2009 ......................... 251

January 29, 2009 ................... 253

December 30, 2008................. 253


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December 30, 2008................. 254

October 16, 2008 ................... 255

July 26, 2008 ........................ 256

April 23, 2008 ....................... 257

January 17, 2008 ................... 258November 12, 2007................. 259

July 11, 2007 ........................ 260

August 25, 2006 ..................... 262

July 17, 2006 ........................ 262

May 2, 2006 .......................... 263

SEBI circular on Anti Money Laundering Measures January 23, 2006 ................... 263

CONNECTIVITY / RECONCILIATION

Readiness for Dial-up connectivity Nov 11, 2006......................... 277October 9, 2002 ..................... 278

WAN to WAN Connectivity December 18, 2001 ................. 278

RECORD KEEPING

SEBI circular on maintenance of recordsand documents August 12, 2005 ..................... 283

SYSTEMS

Master Circular on back office file formats August 9, 2008 ...................... 288

Multi Protocol Label Switching (MPLS) December 29, 2008................. 289

October 10, 2008 ................... 289

September 6, 2008 ................. 291

July 10, 2008 ........................ 293

June 9, 2008 ......................... 294

EOD timing for Participants October 10, 2008 ................... 294

May 30, 2008 ........................ 294

Version Releases and Features June 17, 2009 ....................... 295June 1, 2009 ......................... 295

March 14, 2009 ...................... 296

February 27, 2009 .................. 297

December 16, 2008 ................. 299

September 1, 2008 ................. 302

February 5, 2008 .................... 305

October 5, 2007 ..................... 317

PAN Import Utility to upload PAN details July 21, 2006 ........................ 326


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Software utilities for making queries in DPM system November 24, 2006 ................. 328

October 16, 2006 ................... 330

September 23, 2006 ................ 333

Caution to be exercised while executing freeze

in Client accounts using Freeze Utilities December 20, 2006 ................. 334DPM Software - Modification only withprior permission of NSDL September 13, 1997 ................ 337

Additional Software permitted on DPM System September 7, 2002 ................. 338

March 8, 2002 ....................... 338

DPM System - General operating instructions December 28, 1997 ................. 339

DPM system - Guidelines for monitoringhard-disk space August 13,1998 ...................... 343

DPM system - Monitoring hard-disk failure July 29, 2002 ........................ 344

May 18, 2001 ........................ 345DPM system - Monitoring messages &

Releasing instructions June 22, 2002 ....................... 345

DPM System - Reporting problem to NSDL Helpdesk October 12, 1998 ................... 347

DPM System - Upgrading DPM hardware-Prior permission of NSDL February 18, 1999 .................. 347

DPM System - Security administration October 26, 2002 ................... 347

May 31, 2000 ........................ 347

DPM setup after upgradation -Checklist for Compliance April 10,2004 ........................ 348

NSDL email server April 19,2004 ........................ 349

Phasing out of CISCO Router 2500 series July 27, 2005 ........................ 350

August 9,2004 ....................... 350

Creation of Automated System Recoverybackup in Windows 2003 server October 10, 2008 ................... 350

Backup on holidays & Penalty March 21,2002 ....................... 351

January 6,1998 ...................... 351

FAQs for backup June 5, 1998 ......................... 352

DPM System - Backups March 3,2003 ........................ 356May 13, 2002 ........................ 357

August 31,1999 ...................... 357

Anti-virus October 3,2002...................... 358

FAQs on Anti-virus October 28,2002 .................... 360

Disablement of User IDs that are not complying

to System Security Policy April 26, 2008 ....................... 362


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DPM Systems - Capacity planning and operationalguidelines for performance optimization January 29,1999 .................... 362

DPM Capacity Enhancement - server configuration June 16, 2008 ....................... 364

March 24, 2006 ...................... 364

DPM System - Recommended hardware configuration November 6, 2002 .................. 369May 12, 2000 ........................ 370

January 12,2000 .................... 371

Low End DPM System - Recommended hardwareconfiguration February 21, 2003 .................. 372

DPM Systems - Recommended hardwareconfiguration after implementing archival system November 28, 2000................. 372

Upgradation of DPM Server operating system (OS)software from Windows 2000 server OS toWindows 2003 Server OS May 20, 2008 ........................ 373

Change in Operating System for DPM Serverto Windows 2000 and changes inServer Configurations December 2, 2002 .................. 374

July 18, 2002 ........................ 375

November 6, 2001 .................. 376

July 30, 2001 ........................ 376

RENEWAL OF REGISTRATION

Submitting Documents Or information to SEBI March 4, 2005 ....................... 379



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1. Account Opening

a. General

Section 5 Any person, through a participant, may enter into an agreement, in such

form as may be specified by the bye-laws, with any depository for availing itsservices.

Regulation 41 Every participant shall enter into an agreement with a beneficial owner before

acting as a participant on his behalf, in a manner specified by the depositoryin its bye-laws.

Regulation 42 (1) Separate accounts shall be opened by every participant in the name of each

of the beneficial owners and the securities of each beneficial owner shall besegregated, and shall not be mixed up with the securities of other beneficialowners or with the participant's own securities.

Bye Law 6.4.1 No Participant shall conduct business as a Participant with its Clients unless ithas entered into an agreement with its Clients.

Bye Law 9.1.2 The Participant shall maintain separate accounts in respect of each Clientand its own account. The Participant shall intimate the balances held in its

own account and Client account to Depository on a daily basis.

Bye Law 9.1.5 The Client will be required to enter into an agreement with the Participant inaccordance with the provisions of Chapter 6 of these Bye Laws.

Bye Law 9.1.6 Once the application has been accepted by the Participant, the applicantwill be issued a Client account number.

Rule 12.1.2 The Participant shall ensure that the application form submitted by the Clientis completely filled, including the Bank Account particulars of the Client, andproperly signed.

Master circular on Account Opening version 2.2 was issued in May 2009. Circulars issued thereafter

and other relevant circulars are listed below :

Circular No: Sub : SEBI clarification on depository related issues for PMS clients.

NSDL/POLICY/ All Participants are hereby informed that SEBI has vide its letter no. IMD/MT/

2009/0047 165502/2009 dated June 5, 2009 clarified the issues relating to depository

Date: June 13, 2009 accounts raised by Portfolio Managers. These clarifications are given below:

1. PMS providers be allowed to open demat accounts for their clients

on the basis of the PMS client agreement & power of attorney signed

with the client.

SEBIs comments: Accounts can be opened by the client only and not

through use of Power of Attorney (PoA) by the portfolio manager. PoA

may be permitted only for operating the account.

2. BOs account to be allowed to be opened in the name and style of

Name of PM-PMS A/c Investor Name.

SEBIs comments: Accounts may be opened only in the name of the

client and not as suggested by the portfolio managers.

3. Participants be allowed to rely on the IPV of the client done by

portfolio manager and that the other market participants should not

carry out any IPV of clients of portfolio managers.

SEBIs comment: IPV is to be done by each market intermediary

separately as specified under the respective Regulation.


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4. Address for correspondence should be that of the portfolio manager

instead of the client.

SEBIs comment: Portfolio Managers address cannot be captured as

correspondence address. However, the transaction statements may be

sent/made accessible to both the portfolio manager and its client.

5. Facility for holding a pool account for the portfolio managers for

operational and commercial purposes similar to clearing members

accounts and transfers from pool account be treated as on-markettransfers instead of off-market transfers.

SEBIs comment: This is essentially a commercial or operational issue.

Pool account can be used for the purpose of ease of operation i.e.

trades can be done in one single order but the securities can not lie in

the pool account overnight as it will defeat the purpose of SEBI

regulations, hence all securities need to be segregated into the individual

demat accounts of the client.

6. a) Portfolio Managers be allowed to sign only one agreement for

all Clients.

SEBIs comment: This may not be permitted.b) Signature of the Portfolio Manager be allowed to be taken on

record by Participant and Clients signature may be captured

from copy of PoA i.e., the Client of Portfolio Manager will not

give his/her original signature to the Participant on the account

opening form.

SEBIs comment: This may not be permitted.

7. SEBI to issue guidelines to allow market intermediaries viz. DP,

Custodian, Mutual Fund etc. to accept the KYC done by the portfolio

manager and exempt the requirement of separate KYC for PMS clients

be each of these intermediaries.SEBIs comment: Separate KYC for all clients need to be done.

8. SEBI may consider the requirement of appointment of custodian

optional for all portfolio managers.

SEBIs comment: Appointment of custodian is compulsory only for such

portfolio managers whose Assets under Management is more than or

equal to Rs.500 crore.

In respect of bank account details of the Portfolio Manager (instead of that of

the client) to be captured in the depository accounts, SEBI has informed that

the issue is being examined. We will revert to the issue as soon as we hear

from SEBI.Participants are hereby advised to take note of the aforesaid for opening

and operating depository accounts.

Circular No: Sub : Clarification on SMS Alert facility for depository accounts operated

NSDL/POLICY/ by Power of Attorney

2009/0041 As all Participants are aware, SMS Alert is mandatory for all accounts operated

Date: May 29, 2009 through Power of Attorney (POA) (Ref. Circular No. NSDL/POLICY/2009/0035

dated May 7, 2009 and Circular No. NSDL/POLICY/2009/0039 dated May 14,

2009). Based on representations received from Participants relating to certain

operational aspects, it has been decided that SMS Alert facility will not be


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mandatory for the accounts held by non-individuals, NRIs and foreign nationals

until further advice from SEBI as NSDL has referred the matter to SEBI.

For any information/clarifications, Participants are requested to contact NSDL

officials on telephone numbers (022) 2499 4488 / 4494 / 4214 / 4348 (email:

[email protected]).

Circular No: Sub : SMS Alert facility mandatory for existing depository accounts

NSDL/POLICY/ operated by Power of Attorney

2009/0039 Further to NSDL Circular No. NSDL/POLICY/2009/0035 dated May 7, 2009,

Date: May 14, 2009 Participants are advised that SMS Alert will be mandatory for the existing

accounts which are operated through Power of Attorney (POA). Participants

are requested to advise their existing accountholders whose accounts are

operated by POA to provide the mobile numbers and subscribe for SMS Alert

facility by October 31, 2009.

In case the accountholder does not have a mobile phone, he/she may provide

mobile number of any person as per his / her discretion.


officials on telephone numbers (022) 2499 4488 / 4494 / 4214 / 4348

(email: [email protected]).

Circular No: Sub : SMS Alert facility mandatory for depository accounts operated by

NSDL/POLICY/ Power of Attorney

2009/0035 All Participants are hereby informed that in the meeting held between SEBI,

Date: May 7, 2009 Depositories and Stock Exchanges on April 6, 2009, it was decided that SMS

Alerts should be made mandatory for accounts operated by Power of Attorney

(POA).

In view of the above, Participants are advised to note that with effect from

June 1, 2009, SMS Alert facility will be mandatory with respect to:

(i) new depository accounts with POA and;

(ii) existing depository accounts (in case the accountholders opt for POA in

future).

The accountholders in above cases will have to provide the mobile numbers

to the Participants and subscribe for SMS Alert facility. The Participants must

ensure the same while opening new depository accounts with POA and taking

on record POA for existing accounts. In case the accountholder does not have

a mobile phone, he/she may provide mobile number of any person as per his

/ her discretion.


officials on telephone numbers (022) 2499 4488 / 4494 / 4214 / 4348 (email:

[email protected]).

'Master Circular' on 'Account Opening' - Version 2.2 - May 2009

Sr.No Topic

(I) Guidelines in respect of account opening in case of individuals (Non-Body Corporate)

1 Individuals, Karta of HUF, Partners in case of Partnership firm, Guardian in case of minor

account

1.1 In-person verification of applicant(s) at the time of opening depository account

1.2 Execution of agreement


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1.3 Submission of valid proof of identity / proof of address

1.4 Collection of KYC documents in case of joint holdings

1.5 Verification of Documents

1.6 Exercising of due diligence

1.7 Application of stricter criteria in selecting KYC documents

1.8 Concurrent Audit with respect to account opening

2 Procedure for capturing of demographic details of the account holder(s)

2.1 Capturing of PAN details2.2 Capturing of local and correspondence address

2.3 Capturing of Bank details

3 Mode of capturing the details in the DPM System

4 Procedure for opening HUF account

5 Procedure for opening of a minor account

5.1 Procedure to be followed by Participants on minor attaining majority

6 Accounts opened in the names of Partners for holding securities that belong to a Partnership

firm

7 Non-Resident Indian / Foreign National (NRI/FN)

7.1 KYC documentation and PAN for NRI and FN Clients7.2 Opening of NRI (Repatriable/Non- Repatriable) account

7.3 Reserve Bank of India (RBI) Clarification with respect to NRI / FN

8 Opening of account of an illiterate person

9 Opening of an account of a Blind person

10 Procedure to be followed with respect to Nomination

11 Procedure for change in demographic details

11.1 Change of address

11.2 Change of Signature

11.3 Change in status of Standing Instruction

11.4 Change in bank details such as account type, account number, name, address and MICR

11.5 Change in SMS flag and/or mobile numbers

11.6 Addition / Deletion / Modification of Power of Attorney holder(s)

11.7 Make a nomination / Cancel the Nomination

(II) Guidelines in respect of account opening in case of Body-Corporate

1 Procedure for opening account of a Body-Corporate

1.1 Documents to be obtained at the time of opening depository account

1.2 Verification of documents

1.3 Verification of PAN, address and bank details

2 Additional requirement with respect to Foreign Corporate Bodies

3 Opening of an Escrow Account

4 Procedure for change in demographic details

4.1 Change of address

4.2 Change of authorised signatory

4.3 Change in status of standing instruction

4.4 Change in bank details such as account type, account number, name, address and MICR

4.5 Addition / Deletion / Modification of Power of Attorney holder(s)

5 Change in name of Body-Corporate Accounts

(III) Depository accounts opened in the capacity of Individual/Body Corporate as applicable

1 Opening of depository accounts in case of Trusts such as Provident Fund trusts, Gratuity

trusts, Superannuation trusts etc.


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2 Opening of promoter account

3 Opening of DR account

4 Opening of a Commodity Account

5 Procedure regarding operation of account through Power of Attorney

5.1 Sample Clause

5.2 General points regarding Power of Attorney

5.3 Review of Power of Attorney document

(IV) Procedure for opening and shifting/closing of Clearing Member (CM) Account

1 Opening of CM Account

1.1 Shifting/Closure of CM Account

1.2 Procedure for change of name of CM account

2 Opening of Margin Account

(V) FAQs related to Account opening

Annexure I

(I) Guidelines in respect of account opening in case of individuals (Non-Body Corporates)

(1) Individuals, Karta of HUF, Partners in case of Partnership firm, Guardian in case of minor

account

(1.1) In-person verification of applicant(s) at the time of opening depository account

(NSDL/POLICY/2007/0016 dated March 16, 2007, NSDL/POLICY/2008/0030 dated

April 30, 2008 & NSDL/POLICY/2008/0076 dated October 27, 2008)

(a) At the time of opening depository accounts, the staff of the Participant should

establish the identity of the applicant(s) (including guardian in case of minor

account) by verifying the photograph(s) affixed in the account opening form

(Annexure J) as well as proof of identity document(s) as mentioned below in

point no.(I)(1)(1.3), with the person concerned. Further, in case of joint accounts,

in-person verification needs to be carried out for all the holders of the account.

(b) The staff of the Participant only should carry out in-person verification. The

Participant should not outsource or assign the activity of in-person verification

to an outside agency.

(c) Upon the applicant(s) submitting the account opening form, proof of identity &

address documents and PAN details, staff of the Participant should follow the

procedure as given below:

(i) Verify the identity of the applicant(s) as clarified in point no.(I) (1) (1.1) (a)

above.

(ii) After due verification, affix a stamp on the face of the account opening

form or on the document(s) collected as proof of identity to the effect thatthe identity of the applicant(s) is verified in-person. The stamp should

carry the following details:

Name of the Participant and Participant ID,

Name / Details of Branch/Service Centre,

Details of the Participant staff who has carried out in-person

verification (Name, Employee code if any, Signature),

Date and place where in-person verification was carried out.

(iii) If in-person verification is done through web camera, then mention IPV

through webcam.


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(d) If the Participant wishes to keep the above records mentioned in point (I) (1) 1.1

(c) (ii) (i.e. verification details) in an electronic form, prior approval from NSDL

should be obtained as per the NSDL Business Rule 16.4.1. Further, the Participant

should ensure that the records are made available to NSDL officials, SEBI or any

other Statutory Authority, whenever required.

(e) Participants can stamp or print the in-person verification details on the account

opening form (Annexure J). Such details may be stamped or printed on any

page, as the Participant may deem fit without making illegible the other detailsmentioned in the account opening form. However, attachment of separate sheet

to the account opening form or affixing stickers on the account opening form

carrying in-person verification details will not be permitted. (NSDL/POLICY/

2007/0022 dated April 18, 2007).

(f) Participants may use web-camera for carrying out in-person verification for

opening of depository accounts at the branch/franchisee offices of the Participant

subject to compliance with other SEBI guidelines/circulars relating to opening

of depository accounts including verification of documents.

(1.2) The applicant should fill up the Account Opening Form as per the format given in

Annexure J of the Business Rules of NSDL and submit the same to the Participant

alongwith the agreement (as per Annexure B of NSDL Bye Laws) duly executed on a

stamp paper of appropriate value. Further, the Participant shall be responsible in

deciding the value of the stamp paper. The schedule of fees to be charged by the

Participant to the Client should form a part of the agreement.

(1.3) The applicant should submit any one of the following as a valid proof of identity /

proof of address alongwith a photocopy (NSDL/PI/2004/1622 dated September 7,

2004):

(a) Proof of Identity (POI):

I. Passport

II. Voter ID Card

III. Driving license

IV. PAN card with photograph

V. Identity card/document with applicants Photo, issued by

a) Central/State Government and its Departments,

b) Statutory/Regulatory Authorities,

c) Public Sector Undertakings,

d) Scheduled Commercial Banks,

e) Public Financial Institutions,

f) Colleges affiliated to Universities (this can be treated as valid only till

the time the applicant is a student),

g) Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their

Members and

h) Credit cards/Debit cards issued by Banks.

(b) Proof of Address:

I. Ration card

II. Passport

III. Voter ID Card

IV. Driving license


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V. Bank passbook / Bank Statement (NSDL/POLICY/2007/0074 dated December

1, 2007 and NSDL/POLICY/2008/0037 dated May 27, 2008)

VI. Verified copies of

a) Electricity bills (not more than two months old),

b) Residence Telephone bills (not more than two months old) and

c) Leave and License agreement / Agreement for sale.

VII. Self-declaration by High Court & Supreme Court judges, giving the newaddress in respect of their own accounts.

VIII. Identity card/document with address, issued by

a) Central/State Government and its Departments,

b) Statutory/Regulatory Authorities,

c) Public Sector Undertakings,

d) Scheduled Commercial Banks,

e) Public Financial Institutions,

f) Colleges affiliated to Universities (this can be treated as valid only till

the time the applicant is a student) andg) Professional Bodies such as ICAI, ICWAI, Bar Council etc., to their

Members.

(1.4) In case of joint holdings, POI and Proof of address documents must be collected in

respect of all the account holders.

(1.5) An authorised official of the Participant should verify the photocopies of documents

submitted with their corresponding originals and put his/her signature on them with

remarks verified with original before proceeding to open the account.

(1.6) The aforesaid documents are the minimum requirement for opening of a beneficiary

account. Participants are advised to exercise due diligence while establishing identity

of the person to ensure the safety and integrity of the depository system.

(1.7) Participants can apply stricter criteria and accordingly, decide to accept selected

documents out of the list of documents prescribed above (point no. (I) (1) (1.3)), as

POI and Proof of Address (NSDL/PI/2004/2117 dated November 25, 2004).

(1.8) 100% verification needs to be carried out in respect of account opening by the

Concurrent Auditor of the Participant. The Concurrent Auditor should conduct the

audit in respect of all accounts opened during the day, by the next working day. In

case the audit could not be completed within the next working day due to large

volume, the auditor should ensure that the audit is completed within a weeks time.

Participants would be required to appoint a firm of qualified Chartered Accountant(s)

or Company Secretary(ies) or a Cost and Management Accountant, holding a certificateof practice for conducting the concurrent audit. Participants in case they so desire,

may entrust the Concurrent Audit to their Internal Auditors. (NSDL/POLICY/2006/

0021 dated June 24, 2006, NSDL/POLICY/2007/0017 dated March 22, 2007 and NSDL/

POLICY/2009/0020 dated March 16, 2009).

(2) Procedure for capturing of demographic details of the account holder(s)

(2.1) Capturing of PAN details (NSDL/POLICY/2006/0007 dated March 3, 2006 and NSDL/

POLICY/2006/0031 dated August 9, 2006):

(i) Participants should obtain a photocopy of the PAN card of the person(s) seeking

to open the account and verify the same with the original PAN card.


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(ii) Further, the name of depository account holder(s) should be compared with the

name appearing on the website of the Income Tax Department (ITD) i.e. https:/

/incometaxindiaefiling.gov.in/knowpan/knowpan.do. Alternatively, subscribe to

the internet based service of NSDL(NSDL/POLICY/2007/0048 dated August 14,

2007) so that the name can be sought against the given PAN.

(iii) In case the name(s) do not match or the PAN is not present in the Income Tax

database, Participants should seek necessary clarification from the account

holder(s) and activatesuch accountsin the DPM Systemonly after the discrepancy

is resolved.

(iv) In case of joint accounts, the PAN of each of the joint holder should be captured

in the DPM System after making verification as explained above. As all Participants

are aware, DPM System is enabled to capture PAN of all joint holder(s) of a

depository account.

(v) After verifying the details of PAN as mentioned above, the staff of the Participant

should affix a stamp as PAN verified, on the photocopy of the PAN card(s).

(vi) Thereafter, PAN flag(s) should be enabled in the DPM System (NSDL/POLICY/

2006/0012 dated March 25, 2006).

(2.1.1) With respect to PAN, Clients may have reported the following problems:

(a) PAN card has been lost / misplaced or PAN card was never received but has the

PAN allotment letter from the ITD;

(b) Change in the name of the Client due to marriage or voluntary action etc., (in

case of individuals) or due to merger, amalgamation etc. (in case of a corporate

entity).

In this regard, Participants are advised that the ITD issues a new PAN card with

the same PAN with changes in PAN data, for the above reported problems. For

detailed procedure, Participants may refer http://www.incometaxindia.gov.in

or http://www.tin-nsdl.com (NSDL/POLICY/2006/0024 dated July 7, 2006).In cases where there is minor mis-match in the name of Client as is mentioned in

the account opening form and the name displayed on the ITD website, the

Participants can collect the PAN card proof as submitted by the account holder.

However, this would be subject to the Participants verifying the veracity of the

claim of such Clients by collecting sufficient documentary evidence in support

of the identity of the investors as provided in the SEBI Circular No. MRD/DoP/

Dep/Cir-29/2004 dated August 24, 2004 (Refer point no. (I)(1)(1.3) above for

list of documents which can be accepted as a valid proof of identity). The

Participant should call for any additional documents and / or clarification to

ascertain and satisfy itself about the identity of the entity.(2.1.2) Participants are restricted from modifying the PAN of a holder in a Client account in

DPM System, once the PAN flag has been enabled. However, Participant may approach

NSDL for modifying the PAN or PAN flag and NSDL will provide a facility for Participants

to register a request for modification of PAN for such holders in Client account (NSDL/

POLICY/2007/0052 dated September 13, 2007).

(2.1.3) Participants may note that PAN may not be insisted in the case of Central Government,

State Government and the officials appointed by the courts e.g. Official liquidator,

Court receiver etc. (under the category of Government) for transacting in the securities

market on behalf of the Central and State Government. Further, SEBI has clarified

that the exemption from mandatory PAN requirement applies to transactions


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undertaken on behalf of the Central and State Government, but not to the transactions

of the employees of Central and State Government in their personal capacity. (SEBI

Circular No. MRD/DoP/Cir-20/2008 dated June 30, 2008 and NSDL Circular Nos. NSDL/

POLICY/2008/0048 dated June 30, 2008 & NSDL/POLICY/2008/0049 dated July 8,

2008).

(2.2) Capturing of local and correspondence address(NSDL/PI/2005/1102 dated June

22, 2005 & NSDL/POLICY/2008/0040 dated June 4, 2008)

(a) Participants can capture two addresses in the DPM System for a Client (first

holder/sole holder) i.e. local and correspondence addresses. The Client Master

Report and Export will carry both these addresses.

(b) For both, local and correspondence addresses of a Client, Participants should

ensure that they collect and verify the KYC documents as mentioned in point

nos. (I) (1) (1.3) (Individual) and (II) (1) (1.1) (Body-Corporate) and only then

the same should be captured in the DPM System.

(c) The local address would be the default address that would be forwarded to the

Registrar & Transfer Agent (RTA) as well as used for printing Transaction Statement

(SOT) from DPM System. However, the Client has the option to request the

Participant to use the other address i.e. correspondence address for the aforesaid

purposes. In such a situation, the Participant should disable the default indicator

under the option Beneficiary Address Local (referred to as Address Preference

Flag in batch file import format).

(d) Participants may capture the landmark details in the DPM System, which are not

mentioned in the proof of address submitted by the Client but are mentioned by

Client in the account opening form. The landmark details could include details

like name of the building / mall / junction / school / garden / hotel / bank /

railway station / company name / bus depot etc with the preceding words such

as near by, adjacent to, behind, next to, opposite to, off etc.

(2.3) Capturing of Bank details (NSDL/PI/2000/2295 dated December 20, 2000):

Complete bank address including 9-digit MICR code is necessary for the Issuers to

undertake distribution of corporate benefits directly to the bank accounts of beneficial

owners. Participants are hereby advised to obtain a specimen copy of cheque and

capture 9-digit MICR codes for all the accounts opened with them. Further, Participants

are advised to capture bank address details strictly in the manner described below:

Row 1 : Building / Tower / Apartment / Palace / Chamber / Mansion

Row 2 : Street / Road / Marg / Lane / Avenue / Rasta

Row 3 : Area name

Row 4 : City namePin code : Bank address PIN code

(3) Mode of capturing the details in the DPM System

(a) The Participant should enter the details of the Client as mentioned in the Account

Opening Form, in the DPM System after verifying with the POI and Proof of Address.

It may be mentioned that Participants can avail the facility of Bulk Verify and Release

with respect to opening of Client accounts in the DPM System (NSDL/PI/2007/0019

dated April 4, 2007).

(b) The Participant should capture the Clients signature(s) as given in the Account Opening

Form in the DPM System.


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(c) For ease of data entry, the Standing Instruction indicator in the DPM System would

be in an enabled status with respect to Client Category: Individual, Type: Resident

and Sub-type: Ordinary at the time of opening depository accounts. For those Clients

who have not opted for Standing Instructions, the Participant should disable the

Standing Instruction indicator in the DPM System (NSDL/POLICY/2008/0059 dated

September 1, 2008).

(d) For ease of data entry, the SMS flag of the account holder will automatically get

enabled in the DPM System after the Participant captures the mobile number

(Participants are advised to strictly capture the ten digit mobile number with the

first digit as 9) of the respective account holders at the time of opening of depository

accounts. If the Client submits the mobile number but does not wish to opt for the

SMS Alert facility, the Participant should capture the mobile number in the DPM

System and disable the SMS flag either from the front end of the DPM System or

through back office file import (NSDL/POLICY/2008/0059 dated September 1, 2008).

(e) The Participant should save the details and enter the Client account number (Client

ID) generated by DPM System in the Account Opening Form.

(f) The Participant should print the Client Master Report and give it to the Client alongwith

a copy of the Agreement. Such information should be provided only after the account

is in Active status in the DPM System. (NSDL/PI/98/583 dated November 18, 1998).

(4) Procedure for opening HUF account

(a) Open the beneficiary account in the name of the Karta of the HUF. The HUF account

should not have joint holdings (NSDL/PI/2002/1346 dated August 12, 2002).

(b) POI and Proof of Address of Karta should be obtained as mentioned in point no. (I)

(1) (1.3).

(c) PAN details of the HUF should be captured in the DPM System after due verification

(NSDL/POLICY/2006/0031 dated August 9, 2006).

(d) Since Clients are required to open HUF (depository) accounts in the name of Karta,they may face difficulty in encashing cheques / demand drafts in respect of dividend

/ interest warrant, since the bank account may have been opened in the name of

HUF. For this purpose, RBI has clarified that a mandate may be taken by banks from

the accountholder that the cheques drawn in favour of Karta can also be collected

in the account of HUF and vice-versa. Participants are advised to take note of the

above and provide a copy of Client Master Report so as to enable the Clients to

suitably take up the matter with their banks. A copy of the letter received from RBI,

clarifying the stand to be taken with respect to bank account that is opened in the

name of HUF may be provided at the request of the Clients bank (NSDL/PI/2005/

0159 dated January 27, 2005 and NSDL/POLICY/2007/0064 dated October 19, 2007).(5) Procedure for opening of a minor account

SEBI has intimated to NSDL clarifying the position on operation of the depository accounts held

in the name of minors as follows:

Under [The] Hindu Minority and Guardianship Act, 1956, permission of court is required in the

case of transfer by a natural guardian of immovable property of a minor. However, shares are

not immovable property. Section 2(7) of Sale of Goods Act, 1930 includes shares within the

definition of goods. Neither the Indian Contract Act nor the Sale of Goods Act provide for

transfer by sale or otherwise by guardian/natural guardian of goods/movable property in the

name of minor to the effect that permission of court is required in the matter of such transfer.


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In the case of accounts of minor in banks also, the guardian is entitled to open, operate and

even close the account also. The depository account can, therefore, be operated by a natural

guardian without any order from the court though the same is neither expressly permitted nor

prohibited. (NSDL/PI/2000/323 dated March 17, 2000)

Participants should follow the below given procedure for opening depository account of a

minor: (NSDL/POLICY/2007/0004 dated January 11, 2007 and NSDL/POLICY/2009/0015

dated February 27, 2009)

(i) Account opened in the name of minor should not have joint holdings.

(ii) Obtain POI, Proof of Address and the photograph of the Guardian as per the procedure

laid down in point no. (I) (1) (1.3) above.

(iii) Photocopy of school leaving certificate / Marksheet issued by Higher Secondary Board

of respective states, ICSE, CBSE / passport of the minor / original or attested or

notarized (in case of photocopy) birth certificate of the minor to ascertain the date

of birth of the minor. At the time of accepting either of these documents, Participant

should verify the same with the original.

(iv) PAN details of the minor should be captured in the DPM System after due verification.

(NSDL/POLICY/2006/0031 dated August 9, 2006)(5.1) Procedure to be followed by Participants on minor attaining majority (NSDL/

POLICY/2008/0034 dated May 21, 2008).

On minor attaining majority (i.e. 21 years of age in case of minor whose Guardian is

court-appointed or 18 years where minors account is represented by a natural

guardian), Participants should follow the procedure given hereunder:

S. No. Reference RemarkProcedure

(i) Access the module 'Reports' /

Master List / Minor turned

Adult available in the DPM

System

Report displays accounts that

are in status 'Active',

'Suspended for Debit' and

'Suspended for Debit & Credit'

Ascertain the cases where

Minors have attained Majority.

(ii) Point no. (I) (1) of this Circular

and Annexure J of Business

Rules

Income Tax Department (ITD)

issues a new PAN card with

same PAN with relevant

changes on PAN card, on Minor

attaining majority. For

detailed procedure,

Participants may refer http:/

/www.incometaxindia.gov.in

or http://www.tin-nsdl.com.

Communicate to the Client

(Minor attained Majority)

immediately advising him/her

to submit a fresh account

opening form alongwith

necessary KYC documents &

PAN card alongwith photograph

of the Client and also comply

with 'in-person' verification.

(iii) DPM System This is in case where the Client

does not respond within one

month from the date of

communication as mentioned

in point no. (ii) above.

Suspend the account for debit

and disable the standing

instruction for credit

pertaining to the account of

Minor.


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(v) Annexure B of the Bye Laws ofNSDL.

Retain the KYC documents ofGuardian alongwith Participant

- Client agreement executed

earlier at the time of account

opening by the Guardian on

behalf of the Client as a part

of account opening

documents.

Execute a fresh Participant-Client agreement with the

Client.

(vi) Point no. (I) (11) of this

Circular

Capture the new demographic

details in the DPM System after

due verification of same.

Ensure that the demographic

details captured in the DPM

System match with the detailsin the new account opening

form, KYC documents and PAN

card submitted by the Client.

If there is mismatch in the

demographic details captured

in the DPM System or if Client

submits a request for

modification of such details

like change of Bank details,

address details, etc. follow therelevant procedure.

(vii) DPM SystemCapture the signature of the

Client (Minor turned Major) in

the system in place of the

signature of the Guardian

(captured earlier).

(viii) Point nos. (I) (10) of this

Circular and Annexure JA ofBusiness Rules

Select "None" or "Nominee" as

the case may be in the field'Nominee/Guardian' in the DPM

System to disable the entire

Guardian details in the said

account. If "Nominee" is

selected enter the nomination

details.

Select the option after the

aforesaid procedure asmentioned in aforesaid points

is followed and the identity of

the Client is verified. As the

Client has become Major, he/

she can now make a

nomination in his/her account

in favour of any person by filing

with the Participant a request

for making a nomination in

prescribed form.

(iv) Point nos. (I) (1) and (2) (2.1)

of this Circular and Circular no.

NSDL/POL ICY/2008/0030

dated April 30, 2008.

Verify the account opening

form alongwith necessary KYC

documents and PAN as

mentioned under point no.(ii)

herein above.


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(ix) As Clients who have attained

Majority are legally entitled to

execute a contract,

Participants are advised NOT

to accept any requests or

instructions signed by the

Guardian on behalf of the

Client on or after the date the

Client has turned Major.

Any request or instruction(s)

from the guardian, which is/

are to be processed or is having

execution date falling on or

after the date the Minor has

turned Major, shall be

processed/executed only after

receipt of confirmation from

the Client (Minor turned

Major).

(x)

Follow the procedure

mentioned in point nos. (i) to

(viii) above and capture thePAN details in the DPM System

and enable the PAN flag.

Point no. (I) (2) (2.1) of this

Circular

(x)

This is in cases where the

accounts pertaining to Minor

Clients are suspended for debit

and the standing instruction

for credit is disabled on

account of failure of theClients to respond within the

period of one month from the

date of communication to

Client from Participants.

Follow the procedure as

mentioned under point no. (ii)

to (viii) above.

Point no. (I) (5), (5.1) and (5.2)

of this Circular

Accounts already suspended in cases where Clients have not responded

(6) Accounts opened in the names of Partners for holding securities that belong to a Partnership

firm (NSDL/POLICY/2007/0009 dated February 12, 2007)

(i) The account should be opened only in the names of Partners and the securities that belong

to the Partnership Firm can be held in this account.

(ii) Obtain POI and Proof of Address of the Partners as per the documents mentioned in point

no. (I) (1) (1.3). Further, obtain a copy of the Partnership Deed to verify the names of

Partners.

(iii) Obtain an undertaking in the prescribed format from the Partners to the effect that the

Partners would comply with the provisions of the Companies Act, 1956 and other applicable

statutes in respect of securities of the Partnership firm held in the account opened in the

names of the Partners (NSDL/POLICY/2006/0008 dated March 4, 2006).

(iv) PAN details of the Partnership firm should be captured against the names of all the Partners

after due verification (NSDL/POLICY/2006/0031 dated August 9, 2006).

(v) Capture the bank details of the Partnership firm.

Client (Minor turned major) account is suspended for debit for non-compliance with PAN

requirement


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(7) Non-Resident Indian / Foreign National (NRI/FN)

(7.1) Procedure to be followed by Participants with respect to KYC documents and PAN of NRI

(Repatriable/Non-Repatriable) and FN at the time of opening an account in the respective

category:

(i) Obtain POI and Proof of Address of the applicant as per the procedure laid down in

point no. (I) (1) (1.3) above.

(ii) Obtain a declaration from the Client that he/she has complied and will continue tocomply with FEMA regulations.

(iii) Participants are advised to obtain photocopies of Proof of Address in respect of

foreign address where the NRI/FN is residing and verify the same with originals. In

case the NRI/FN Clients have Indian address, Participants are advised to obtain

photocopies of Proof of local address and verify the same with originals. Further, in

case if the NRI/FN has submitted only Proof of Address of the country (foreign address)

where the NRI/FN is residing, in such a situation, Participants may capture the foreign

address in both local and foreign address fields given in the DPM System.

(iv) If Participants find it infeasible to carry out in-person verification of the NRI/FN

Client by their staff and/or verify the original KYC documents (POI and Proof ofAddress i.e. foreign address, where the NRI/ FN is residing) alongwithPAN card, in

such a situation, it is clarified that:

(a) the account opening form and photocopies of the KYC documents and PAN card

should be duly signed by the account holder; and

(b) photocopies of the KYC documents and PAN card is attested by any of the entities

viz; Notary Public, Court, Magistrate, Judge, Local Banker, Indian Embassy /

Consulate General of the country where NRI/FN is residing [outside India]; and

(c) the attestation is to the effect that it has been verified with the originals.

Participants should open the depository accounts or accept the PAN card only

after it is satisfied with the authenticity of the documents (POI, Proof of Address

and PAN card).

(v) In case where in-person verification for NRI/FN Client has been carried out by the

staff of the Participant or if he/she personally visits the office of the Participant to

submit the KYC documents and PAN card, in such a situation, the NRI/FN would be

exempted from obtaining attestation, on KYC documents and PAN card.

(NSDL/POLICY/2008/0030 dated April 30, 2008, NSDL/POLICY/2007/0022 dated April

18, 2007, NSDL/POLICY/2006/0067 dated December 28, 2006 and NSDL/POLICY/

2006/0049 dated October 19, 2006).

(7.2) NRI (Repatriable/Non-Repatriable) account (NSDL/PI/98/007 dated January 2, 1998):(i) While opening an account for an NRI Client, the Participant should obtain copy of the

RBI approval letter, if any, for acquiring securities, alongwith the account opening

form and other necessary documents.

(ii) The account should be opened in the name of the NRI in the DPM System under

repatriable category when securities are held on repatriable basis and under non-

repatriable category when securities are held on non-repatriatable basis.

(iii) Participants are advised to capture the following details in the DPM System against

the RBI reference number and date:

(a) If the NRI has at any time purchased securities from the secondary market, i.e.,


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under Portfolio Investment Scheme, then the RBI reference number and date

mentioned in the RBI approval letter should be entered.

(b) If the NRI has never purchased securities from the secondary market, but the

securities have been allotted in the primary market, i.e., under Direct Investment

Scheme, then the Participant should mention the following :

RBI Reference No. : Under General Permission

RBI Approval Date : Present date(Subsequently, whenever the NRI gives dematerialisation or receipt instructions

in respect of purchase of securities from the secondary market, the RBI reference

number and date should be entered therein)

(c) If the NRI does not hold any securities, then the Participant should mention the

following :

RBI Reference No. : No Holdings

RBI Approval Date : Present date

(Subsequently, whenever the NRI gives dematerialisation or receipt instructions

in respect of purchase of securities from the secondary market, the RBI reference

number and date should be entered therein)

(iv) While processing dematerialisation, receipt, delivery or pledge instructions from

NRI Client, the Participant must obtain a copy of the relevant RBI approval letter

(e.g., RBI approval letter for sale in case of delivery instructions). The Participant

need not obtain copy of the RBI approval letter for every instruction, if the same

approval applies to each such instruction.

(7.3) RBI Clarification with respect to NRI/FN :

(NSDL/PI/2000/1891 dated October 6, 2000)

RBI vide its letter dated July 18, 2000 to one of the Participant of NSDL has issued the

following clarifications with regard to permission to open Bank Account and DepositoryAccount to sell shares acquired under ESOP by FN:

(a) RBI approval is not required for opening depository account.

(b) RBI has not put any condition that for opening of depository account, the non-resident

shareholder must have a bank account. The depository account may be opened as

per the norms of NSDL and the concerned bank.

(c) RBI has already granted General Permission for sale of shares on stock exchanges by

non-residents and for sale of shares by negotiated deals, application in TS-1 form

may be submitted to concerned Regional Office of RBI for obtaining permission.

(d) FN can sell the shares held under ESOP on stock exchange without RBI permission.

Participants are required to ensure that all transactions in the account are in

compliance with FEMA regulations. Accordingly, Participants are advised to obtain

from the NRI/FN, necessary documents evidensing general/specific approvals as may

be required under FEMA regulations.

(8) Opening of account of an Illiterate person (NSDL/PI/2002/0709 dated May 3, 2002):

NSDL has prescribed the procedure for affixing thumb impression (in Annexure J of Business Rules)

while filling an account opening form by an illiterate person. In this context, Participants are

advised to follow the below mentioned procedure:

(a) Illiterate person(s), at the time of opening an account with a Participant must affix the

thumb impression (left hand thumb in case of a male and right hand thumb in case of a


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female) on the agreement as well as on the account opening form.

(b) All accounts opened by illiterate person(s) (hereinafter referred as Clients) must be either

introduced by an existing account holder or must be attested by applicants bank.

(c) The Client(s) must come in person to open the account and submit instruction forms and

affix his/her thumb impression in the presence of the official of the Participant. The

Participant should identify the Client(s) by verifying the photograph submitted by the Client(s)

and read out/explain the contents of the account opening form, Participant-Client agreement

and delivery instruction form to the Client(s). The official of the Participant should then put

his signature and remarks Details explained to the Client(s), on the account opening

form, copy of the agreement and delivery instruction form.

(d) In case such Client(s) is/are temporarily or permanently disabled due to which he/she cannot

come in person to submit the instruction form as mentioned in point (c) above, the thumb

impression of the Client(s) on the instruction forms must be attested by a Magistrate or a

Notary Public or a Special Executive Magistrate or a similar authority holding a Public Office

and authorised to use the Seal of his office or a manager of the account holders bank. The

Client should also produce a medical certificate about his/her disability.

(e) A remark should be put in the DPM System (under the authorised signatory details under

Signatories screen) at the time of opening the account that the account holder is illiterate

or disabled. Further, the instruction forms issued to such Client(s) should be pre-stamped as

Thumb Impression.

(f) At the time of opening of account, the aforesaid rules should be explained to the Client(s)

in the presence of a witness, who will have to sign the agreement and the account opening

form, as a witness.

Participants should note that the aforesaid guidelines are in addition to the existing guidelines

with regard to opening of an account and executing instructions.

(9) Opening of an account of a Blind person (NSDL/POLICY/2007/0049 dated August 21, 2007):

(a) Obtain POI, Proof of Address and the photograph of the blind person(s) (hereinafter referredas Client) as per the procedure laid down in point no. (I) (1) (1.3). Carry-out in-person

verification of the Client as per the procedure laid down in point no. (I) (1) (1.1). Obtain

PAN card of the Client and follow the procedure laid down in point no. (I) (2) (2.1).

(b) The Participant should read out and explain to the Client, the contents of the account

opening form and Participant-Client agreement whenever so requested by the Clients. In

case the Client is an illiterate, Participant should follow the procedure laid down in point

no. (I) (8).

(c) The Participant should capture the Clients signature(s) as given in the Account Opening

Form in the DPM System. Further, a remark should be put in the DPM System (under the

authorised signatory details in signatories screen) that the Client is Visually Challenged.Further, if the Client is illiterate, then Participant should put in the remark as Visually

Challenged and Thumb Impression.

(d) For issuance, re-issuance and processing of Delivery Instruction Slips (DIS) of such Clients,

Participants are advised to follow the procedure laid down in NSDL Circular No. NSDL/PI/

2004/1401 dated August 5, 2004. Participants would also be required to comply with NSDL

Circular No. NSDL/POLICY/2007/0011 dated February 15, 2007 regarding SEBI circular on

DIS. It is also added that the DIS issued to such Clients should be pre-stamped as Visually

Challenged or Visually Challenged and Thumb Impression as the case may be. Further,

these Client(s) should visit the office of the Participant to deliver the DIS, only if they are

illiterate.


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Participants are requested to note that the above mentioned procedures will be applicable

for new accounts opened since August 21, 2007 (issuance of the revised circular) as well as

for processing of DIS for the existing Clients.

(10) Procedure to be followed with respect to Nomination (NSDL/POLICY/2009/0002 dated January

3, 2009 and NSDL/POLICY/2009/0004 dated January 9, 2009):

(a) At the time of opening his/their account, the Client will be required to tick the appropriate

option as given below:

(i) I/We wish to make a nomination and do hereby nominate the following person in

whom all rights and / or amount payable in respect of securities held in the Depository

by me / us in the said beneficiary owner account shall vest in the event of my / our

death.

(ii) I/We do not wish to make a nomination.

(b) For Client(s) who make a nomination of his/their account in favour of any person, may, fill-

up with the relevant Participant the form laid out in Annexure JA of the Business Rules. In

the case of joint accounts, all the account holders shall be required to affix their signatures

to the said form. Such nomination shall be conclusive evidence of the Client(s) disposition in

respect of all the securities in the account for which nomination has been made.(c) The nomination can be made only by individuals holding beneficiary accounts on their own

behalf singly or jointly. Non-individuals including society, trust, body corporate, partnership

firm, karta of HUF, holder of power of attorney cannot nominate. If the account is held

jointly, all joint holders will sign the nomination form.

(d) A minor cannot nominate. However, a minor can be a nominee. In that event, the name

and address of the Guardian of the minor nominee shall be provided by the beneficiary

owner. The details with respect to date of birth of the minor nominee and the flag to

indicate such nominee should be captured in the DPM System (NSDL/PI/2005/1102 dated

June 22, 2005).

(e) The Nominee shall not be a trust, society, body corporate, partnership firm, karta of HUF ora power of attorney holder. A non-resident Indian can be a Nominee, subject to the exchange

controls in force, from time to time.

(f) Nomination in respect of the beneficiary account stands rescinded upon closure of the

beneficiary account. Similarly, the nomination in respect of the securities shall stand

terminated upon transfer of the securities.

(g) Transfer of securities in favour of a Nominee shall be valid discharge by the depository

against the legal heir.

(h) The cancellation of nomination can be made by individuals only holding beneficiary accounts

on their own behalf singly or jointly by the same persons who made the original nomination.

Non-individuals including society, trust, body corporate, partnership firm, karta of HUF,holder of power of attorney cannot cancel the nomination. If the beneficiary account is held

jointly, all joint holders will sign the cancellation form.

(i) On cancellation of the nomination, the nomination shall stand rescinded and the depository

shall not be under any obligation to transfer the securities in favour of the Nominee.

(j) Participants must send a communication to their existing Clients who have not yet opted for

nomination, to submit a declaration specifically stating the following:

I/We the undersigned wish to make a nomination in respect of my Beneficial Owner

(BO) account and the nominee details are as follows:

I/We the undersigned do not wish to make a nomination in respect of my BO account.


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Further, Participants are also requested to refer rule 12.6.3 of Business Rules of

NSDL with respect to details on nomination.

(11) Procedure for change in demographic details

(11.1) Change of address (NSDL/PI/2004/1622 dated September 7, 2004 & NSDL/POLICY/2008/

0040 dated June 4, 2008):

(a) While processing requests for change of address received from Clients, Participants

should obtain the following documents:(i) a written application for change of address from the Client (In case of joint

holdings, all holders must sign the application);

(ii) POI [copy of any one of the documents mentioned in (I) (1) (1.3) (a) above of the

Client (sole holder or either of the holders) visiting the office of the Participant];

(iii) latest transaction statement of the account received from the Participant. In

case a Client (sole holder or either of the holders) personally visits the

Participants office to submit an application (signed by all holders in case of

joint holdings) for change of address alongwith necessary documents (POI /

proof of address) mentioned in point no. (I) (1) (1.3), the Participant need not

obtain the transaction statement from such Client (NSDL/POLICY/2007/0030dated June 18, 2007);

(iv) Proof of new address (copy of any one of the documents mentioned in (I) (1)

(1.3) (b) above) alongwith the original documents of the new address for

verification.

(b) The Client should personally visit the office of the Participant where the Client

maintains and operates his/her account and submit the application for change of

address. However, in case the Client expresses inability to personally visit the office

of the Participant, the application for change of address alongwith other documents

can be submitted through an authorised representative, whose identity the Participant

must verify by collecting any of the proof of identity documents as stated in (I)(1)(1.3) above.

(c) The Client or its authorised representative should sign the application once again in

the presence of the officials of the Participant.

(d) The Participant should verify the signature of the Client on the application and the

identity documents with the documents maintained with the Participant. Further,

the document pertaining to new address should be verified with the original. After

due verification, an authorised official of the Participant should put his/her signature

on the application with remarks verified with original and thereafter record the

change of address in the DPM System.

(e) However, in case Participant could not verify the documents because the records ofthe documents submitted by the Client are kept at a different place, then the

Participant must verify the same within a period of seven working days and only then

effect the change.

(f) After effecting the change of address in the DPM System, the Participant should send

a communication to the Client, confirming the change of address, to the old and the

new addresses.

(g) In case of change (addition/deletion/modification) in the landmark details for the

address which is already captured in the DPM System, Participants may limit the

changes to the landmark details, after obtaining a request from the Clients on a


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plain paper, which is signed by all the holder(s) (in case of joint holdings). Participants

are advised to note that the address of the Client captured in the DPM System, as

mentioned in the proof of address, should not change and only limit the change in

the landmark details.

(11.2) Change of Signature (NSDL/PI/2004/0045 dated January 7, 2004):

Participants are advised to follow the below mentioned procedure for effecting change of

signature of Clients:

(i) The Client should make a request in writing specifying reasons for change in signature.

(ii) New signature should be duly attested by Clients banker.

(iii) Client should visit the Participants office personally and produce valid POI. (NSDL/

POLICY/2007/0030 dated June 18, 2007)

(iv) In the presence of officials of Participant, Client should affix his/her new signature.

(v) An authorised official of the Participant shall, under his signature, verify the identity

proof with the proof and photograph that were furnished at the time of opening of

account and thereafter, if found satisfactory, make necessary changes in its records.

(11.3) Change in status of Standing Instruction

If the Client requests for change in standing instruction, Participant should carry out the

changes in the DPM System based